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Chinese School – Stocks edge higher as commodity slide eases

courlearnoncn — Thu, 30 Jun 2011 08:47:28 +0000

A small recovery in commodities and a rally in companies that make consumer staples like toilet paper and pasta helped the financial markets reverse a decline yesterday to end the day with modest gains.

Consumer staples and health care led the market due in part to concerns that high gas prices will erode consumer spending and cut into corporate earnings. Companies that sell everyday items or provide health-related products and services are less dependent on economic growth for their profits since people typically spend money on such items even if they cut back elsewhere. Coca-Cola, McDonald’s and Kraft Foods were among the day’s biggest gainers.

Retail sales rose 0.5 percent, but that number dropped to 0.2 percent after excluding gas prices. Higher energy costs also pushed wholesale prices – the amount companies pay for goods – up 0.8 percent in April, the government said.

“(The market) is watching to see the extent to which higher energy prices crowd out consumption more broadly,” said Andrew Goldberg, a strategist at JP Morgan Funds. If that happens, consumer staples – along with utilities – are typically better investments because their products serve needs, not wants and because they pay higher dividends.

The Dow Jones industrial average gained 65.89 points, or 0.5 percent, to 12,695.92. The S&P 500 added 6.57, or 0.5 percent, to 1,348.65. The Nasdaq composite rose 17.98, or 0.6 percent, to 2,863.04.The Dow Jones industrial average came back from a 93-point deficit earlier in the day.

The Labor Department said applications for unemployment benefits fell last week to 434,000, slightly less than what economists expected. That report also contributed to the early morning market losses.

Crude oil recovered from steep losses earlier in the day and finished nearly 1 percent higher, but remained below US$100 a barrel. Other commodities also recovered. As copper and gold prices went up, materials companies moved higher. Freeport McMoRan Copper & Gold Inc. reversed its losses from the morning and finished nearly 1 higher.

Stock trading has been affected by huge moves in commodities markets over the past two weeks, including a 9 percent drop in the price of oil a week ago and a 27 percent plunge in the price of silver last week. The volatility in commodities and stocks led investors to park money in less risky and more stable assets like government bonds.

Energy companies dropped slightly. ConocoPhillips fell 1.3 percent. A drop in oil prices translates into declining revenues for energy companies.

US government bonds and the dollar both fell as investors became more comfortable holding stocks, commodities and other riskier assets. The dollar fell 0.2 percent against a group of six other currencies, and the yield on the 10-year note rose to 3.23 percent from 3.16 percent late Wednesday. Bond yields rise when their prices fall.

Commodities and stocks have both benefited from the Federal Reserve’s program to boost the economy by buying US$600 billion in Treasury bonds. The Fed’s program had the effect of pushing yields on government bonds lower, encouraging investors to move money into stocks and commodities.

With the Fed’s effort coming to an end in June, the same investments are likely to fall, said Doug Roberts, the chief investment strategist for Channel Capital Research.

“When the Fed pulls back, investors cut back,” Roberts said.

Some well-known companies fell more than the broad markets. Cisco Systems Inc. fell 4.8 percent after the maker of computer networking equipment reported an 18 percent slide in earnings and lowered its profit forecast. It also plans to cut jobs.

Goldman Sachs Group Inc. fell 3.5 percent after it was downgraded by analysts due to a Senate investigation and a Rolling Stone article that argued that the Justice Department should bring charges against the investment bank for defrauding investors.

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Chinese language – Oil settles higher on weaker dollar

courlearnoncn — Wed, 29 Jun 2011 08:46:39 +0000

OIL rose yesterday in volatile trading to settle near US$99 per barrel, with a weaker dollar offsetting concerns about a slowdown in world demand.

Benchmark crude for June delivery gained 76 cents to settle at US$98.97 per barrel on the New York Mercantile Exchange.

Oil has swung wildly this week – between US$95 and US$104 a barrel – as economists and traders try to gauge how much oil the world will need this year. A weaker dollar boosted oil on yesterday. Crude is traded in dollars, so the price tends to increase as the dollar weakens and makes oil cheaper for investors holding foreign money. The US Dollar Index, which measures the dollar against other major currencies, dropped 0.3 percent in afternoon trading.

At the pump, gasoline rose another 2.2 cents yesterday to US$3.984 per gallon (almost a dollar a liter), according to AAA, Wright Express and Oil Price Information Service. A gallon of regular is 19.3 cents higher than a month ago and US$1.088 more than the same time last year.

Tom Kloza, chief oil analyst for OPIS, said that pump prices are still falling along the West Coast, in the Rockies and in New England. The national average increased, he said, mainly because of price hikes in the Midwest and the Southeast, where Mississippi River flooding will make it harder for refineries to transport gasoline to wholesale markets.

“They might not be able to receive shipments from barges or oil tankers for some time,” Kloza said. “There’s some worry about that.”

Alon Refining Krotz Springs said late Wednesday that its operation in Krotz Springs, Louisiana, “may be disrupted” if the Army Corps of Engineers opens the Morganza spillway to take the pressure off levees protecting Baton Rouge. Other refineries said they’re watching water levels closely and have lined their facilities with sandbags as a precaution.

Kloza and other analysts think pump prices will fall across the country, to about US$3.50 a gallon (less than a dollar a liter) by the end of the month, once flooding and other problems that have slowed some refinery production are cleared.

The Labor Department yesterday said rising energy prices made raw materials and factory goods more expensive in April. And the Commerce Department reported that consumer spending increased last month, with most of the increase going to higher food and gas prices.

Meanwhile, executives of top oil companies appeared before the Senate Finance Committee to explain why they should continue to receive big tax breaks while their companies make billions in profits. The hearing featured the CEOs of Shell Oil Co., ExxonMobil, ConocoPhillips, BP America and Chevron Corp.

The International Energy Agency cut its estimate for global demand this year by 190,000 barrels per day, noting that higher gasoline prices in the US appeared to be forcing Americans to cut back on driving. It still expects the world to consume more oil in 2011 than in any year on record.

The Energy Information Administration reported yesterday that US natural gas supplies rose by 70 billion cubic feet last week. Storage levels are about 2 percent below the five-year average. Natural gas for June delivery added 1.5 cents to settle at US$4.256 per 1,000 cubic feet (28.32 cubic meters).

In other Nymex trading for June contracts, gasoline fell 5.89 cents to settle at US$3.0639 per gallon (3.79 liters) and heating oil gained 1.54 cents to settle at US$2.9137 per gallon (3.79 liters).

In London, Brent crude rose 19 cents to settle at US$112.98 per barrel on the ICE Futures exchange.

China Travel – High-end home demand stable in HK

courlearnoncn — Tue, 28 Jun 2011 08:45:52 +0000

HONG Kong’s government yesterday sold a site close to the Peak luxury residential area and two other plots above analyst estimates, signaling developers are confident efforts to cool prices won’t damp demand for high-end homes.

Sun Hung Kai Properties Ltd bought the site on Stubbs Road on Hong Kong Island for HK$4.49 billion (US$578 million), equivalent to HK$24,829 per buildable square foot, based on calculations by Centaline Property Agency Ltd. It may be sold for HK$4.4 billion, the median estimate of five surveyors and analysts polled by Bloomberg News.

Government curbs are unlikely to dent appetite for luxury apartments in locations where fewer plots are available for sale, said Eva Lee, a property analyst at Macquarie Securities Ltd. The government in November increased property transaction taxes and pledged to boost land supply amid public protests that prices are becoming unaffordable and as the central bank warned about the risk of a “credit-fueled property bubble.”

“High-end properties always have better holding value in the long run,” Lee said in an interview in Hong Kong yesterday before the auction.

Estimates for the Stubbs Road site, with a buildable area of 180,835 square feet, ranged from HK$3.6 billion to HK$4.5 billion, with the median translating to HK$24,000 a square foot. Victor Lui, executive director at Sun Hung Kai, Hong Kong’s biggest developer, said his company made the winning bid.

China Overseas Land & Investment Ltd bid HK$579 million for a site in the Kowloon Tong area. Cheung Kong (Holdings) Ltd paid HK$662 million, 60 percent above the HK$410 million median, for a piece of land in Yuen Long.

China Business – SWFs highlight stability point

courlearnoncn — Mon, 27 Jun 2011 08:45:18 +0000

REPRESENTATIVES of the sovereign wealth funds of China, Australia, Russia and other governments defended the funds against criticism they use their investments for political ends, saying yesterday that they are a force for global stability.

At the end of a two-day meeting, representatives to the International Forum of Sovereign Wealth Funds said such funds should be treated as normal investors so long as they disclose their government mandate and act as commercial entities.

“There is no reason to discriminate against them,” said David Murray, chairman of the board of guardians of Australia’s Future Fund, at a news conference. He was ending a term as the forum’s chairman.

Such funds invest government revenues, often from sales of oil and other resources, and have grown amid the global commodities boom. They have faced questions from critics about whether they invest for political reasons, such as to gain access to sensitive technology.

The 23-member forum, founded in 2008, includes funds from Canada, Chile, Qatar, Norway and New Zealand. Alaska’s fund that invests revenues from the state’s oil production is also a member.

Estimates of total SWF assets range as high as US$4 trillion, though some major funds do not disclose the size of their holdings. Abu Dhabi’s fund is believed to be the world’s biggest with up to US$500 billion in assets but does not release details.

The forum proposed operating principles for funds in 2008 to reassure potential recipient countries they were commercial entities, rather than tools of government policy.

HSK – Goldman’s 1st yuan PE fund in Beijing

courlearnoncn — Sun, 26 Jun 2011 08:44:26 +0000

GOLDMAN Sachs set up its first yuan-denominated private-equity fund in Beijing yesterday, signaling the United States investment bank’s long-term commitment to China, according to a source familiar with the deal.

The 5 billion yuan (US$769 million) fund will mainly invest in restructuring projects of state-owned companies and firms in emerging industries in cities on the Chinese mainland, the source told Shanghai Daily yesterday.

CEO Lloyd C. Blankfein attended a deal signing ceremony with Beijing State-owned Assets Management Co to set up the joint equity fund, the source said.

Goldman Sachs Beijing office declined to comment.

Since 2009, Blackstone, TPG Capital and Carlyle have announced plans to launch yuan-denominated PE funds on the mainland. The three firms will raise a combined 20 billion yuan.

Last month, Blackstone said it aims to raise 5 billion yuan in its first round raising with support from government institutions and state-owned enterprises.

In February last year, United States buyout giant Carlyle Group teamed up with China’s largest privately-owned conglomerate Fosun Group to launch a US$100 million yuan-denominated PE fund in Shanghai.

SMC Capital China, a subsidiary under Hong Kong-based Simon Murray Group, said it plans to boost the combined size of yuan-denominated funds under its management to 8 billion yuan in at least eight Chinese cities by 2015.

Shanghai-headquartered SMC Capital now has three yuan-denominated funds totaling 1 billion yuan under management. Two of the funds are with the government in Wuxi, Jiangsu Province, and Wuxi’s Guolian Group while the third is with Dalian’s government.

learn mandarin – Hotelier’s better net

courlearnoncn — Sat, 25 Jun 2011 08:43:39 +0000

BUDGET hotel operator 7 Days Inn Group, China’s second-largest by chain size, yesterday reported a “better-than-expected” net revenue rise of 39.2 percent year on year in the first quarter of this year as it continued to expand rapidly across the country.

Net revenue in the three-month period totaled 421 million yuan (US$64.2 million), the Guangzhou-based hotelier said in a statement.

learn Chinese online – Alibaba Q1 profit up

courlearnoncn — Fri, 24 Jun 2011 08:42:15 +0000

ALIBABA.COM, the business-to-business unit of Alibaba Group, yesterday said profit in the first quarter grew 37 percent from a year ago to 453 million yuan (US$70 million).

Registered users hit 65 million by the end of March while paying members rose 26 percent to more than 110,000, it said in a statement.

It will also step up efforts to detect fraud cases to ensure supplier credibility after two executives resigned earlier this year for failing to monitor fraudulent activities by some of its sellers.

learn Chinese – US economy’s pace weakens

courlearnoncn — Thu, 23 Jun 2011 08:41:09 +0000

THE United States economy struggled to gain momentum early in the second quarter, with retail sales posting their smallest rise in nine months in April and wholesale prices increasing more than expected.

Other data yesterday showed new claims for unemployment benefits fell 44,000 last week to 434,000, but they remained too high to signal a strong labor market recovery.

Retail sales added 0.5 percent after an upwardly revised 0.9 percent gain in March as receipts at gasoline stations and grocery stores rose strongly, the US Commerce Department said. Economists had eyed a 0.6 percent rise.

Excluding gasoline, retail sales rose 0.2 percent.

It was the 10th straight monthly increase in sales and showed US households exhibiting some resilience to lofty food and gasoline prices, which robbed spending from other areas.

“The rise in retail sales was basically related to higher gasoline prices. Overall the report was good because it was positive, but the economy and consumers are still having trouble,” said Eugenio Aleman, a senior economist at Wells Fargo Securities in Charlotte, North Carolina.

Separately, the Labor Department said producer prices rose 0.8 percent in April, after a 0.7 percent rise in March. Economists had expected a 0.6 percent rise.

Financial markets showed little reaction to the economic reports. US stocks were lower as falling commodity prices raised questions about the strength of the global economic recovery, while Treasury debt was little changed and the dollar was higher.

The retail data implied consumer spending, which accounts for 70 percent of US economic activity, got off to slow start in the second quarter as household budgets remained stretched by high food and energy prices.

But a recent drop in gasoline futures pointed to a fall in prices at the pump, which could ease the strain on consumers. US gasoline futures on Wednesday suffered the biggest daily drop since September 2008, with the June contract settling at US$3.1228 a gallon, losing 25.69 cents, or 7.6 percent.

Consumer spending grew 2.7 percent in the first three months of 2011, braking from a 4 percent pace in the October-December quarter, according to the Commerce Department’s first estimate of gross domestic product released last month.

But upward revisions to March’s figures suggested spending might have been stronger than initially thought.

Chinese School – Saab rescue deal collapses

courlearnoncn — Wed, 22 Jun 2011 08:40:17 +0000

A RESCUE deal for Saab involving China’s Hawtai Motor Group collapsed yesterday, leaving owner Spyker chasing new funding alternatives to restart production at the Swedish car maker.

Spyker said it was continuing talks with Hawtai, while a source told Reuters that another Chinese company, sport-utility vehicle maker Great Wall Motor, was also talking to the Dutch company about a possible tie-up.

Meanwhile, Vladimir Antonov is still interested in investing in the troubled Swedish marque, a spokesman for the Russian businessman and former Spyker shareholder said.

Hawtai and Dutch-listed Spyker agreed a deal last week to pump 150 million euros (US$216 million) into the loss-making marque and produce a new model in China. But this was spoiled by a failure to get necessary approvals.

The Hawtai deal came only a year after tiny supercar maker Spyker bailed out the General Motors unit. GM retains an interest through redeemable preference shares.

“Since it became clear that Hawtai was not able to obtain all the necessary consents, the parties were forced to terminate the agreement with Saab Automobile and Spyker with immediate effect,” Spyker said in a statement.

Spyker Chief Executive Victor Muller declined to comment on the failure of the Hawtai deal, the firm’s current financial position or talks with other parties.

Loss-making Saab has veered towards collapse in recent weeks after running out of cash to pay its bills. Several suppliers stopped delivering parts, halting production at Saab’s Trollhatten plant for most of last month.

A Saab spokeswoman said that all of its employees, including those who are not working due to the production shutdown, are being paid. Saab had 3,355 staff at the end of 2009.

The chairman of Sweden’s association of car industry suppliers Christer Palm said he was very concerned about the production stoppages.

“Talks with suppliers haven’t come very far. This is going to take time. Saab needs to find a new shareholder, an approved financier and I hope Victor Muller has one last trick up his sleeve.”

Hawtai’s failure to complete a deal follows similar cases, including Sichuan Tengzhong Heavy Industrial Machinery’s bid for GM’s Hummer, which collapsed in 2010 and China’s Xinmao did not have enough time to obtain approvals to continue its bid for Dutch cable maker Draka.

Spyker said Saab Automobile may still enter into a strategic partnership with Hawtai or another Chinese party on manufacturing, technology and distribution in China.

Great Wall declined to comment on any talks.

Chinese language – Confusing housing data explained

courlearnoncn — Tue, 21 Jun 2011 08:39:15 +0000

CHINA’S National Bureau of Statistics offered an explanation yesterday for a residential housing figure that confused the public.

A detailed explanation by Xian Zude, the bureau’s chief statistician, was published on its website after the public voiced distrust and confusion over a housing figure it used to calculate the cost of living for Chinese citizens last year.

The bureau said in a report last week that residents on the Chinese mainland spent an average of 111 yuan (US$17.10) per month on housing in 2010.

Xian said the figure was a “narrow measurement” that only included utility fees, rent and building management costs, and did not account for mortgage amortizations for home purchases.

The figure was lower than the report’s other figures, which stated that Chinese citizens spent a monthly average of 400 yuan on food, 165 yuan on transport and telecommunications, 136 yuan on education and entertainment and 120 yuan on clothing in 2010, according to the bureau.

“The public and several statisticians do not properly understand the source of the misleading data, nor do they know to what scope the figure can be applied,” Xian said.

To use a broader measure of living costs in China’s urban areas, the average amount spent on housing by urban residents was 636 yuan per month in 2009, he said.

Zheng Xuegong, the bureau official who released the misleading figure, apologized for the confusion on Wednesday, saying that the figure should be adjusted to over 636 yuan on the basis of gross domestic product growth.

The bureau will publish more housing data next Wednesday, according to Xian.